Dear Bob ... I work for a small manufacturing business. To give you an idea of our company's size, I am the IS Director, and one person, the programmer, reports to me. We write and maintain our own code. When we get backed up, we outsource a chunk of the coding. The problem comes when we talk to these people about how they will be compensated. I can't seem to find anyone locally who will accept the idea of payme Dear Bob …I work for a small manufacturing business. To give you an idea of our company’s size, I am the IS Director, and one person, the programmer, reports to me. We write and maintain our own code. When we get backed up, we outsource a chunk of the coding. The problem comes when we talk to these people about how they will be compensated. I can’t seem to find anyone locally who will accept the idea of payment in exchange for a finished product. They simply want to bill us for their time.Needless to say, their goals and our goals are not lining up. Is finding a programmer who will agree to be compensated by the finished product an unreasonable expectation for our little company? Am I not looking in the right places (small, local programming firms)?– Needs a better dealDear Dealer … Beats me why you’re having trouble. Fixed price contracts are common in IT. That’s especially so in a situation like yours, where (I presume) the specifications, and therefore the scope, are tight.They aren’t always a great idea (nothing is always a great idea, so no surprise there): The problem with fixed price contracts is that the contractor has a financial incentive to declare ambiguous items to be out of scope. It’s the old, “You wanted wings on that airplane?” issue.But if you’re confident you’re providing accurate, actionable specifications, and that you’ll accept work that fits the specifications even if it turns out the specs contained an error or ambiguity, hold your ground and insist on a fixed price contract. You might, to sweeten the pot and create a better relationship, agree to pay for an extra period of time in which the contractor validates the specifications. After all, a contractor takes on risk by agreeing to this kind of contract, because any unforeseen gotchas or glitches translate directly to lost margin.This isn’t, by the way, the right contract structure for aligning the contractor’s goals with your own. If that’s important, you should be trying to figure out a way to create a shared-risk/shared-reward contract. These work by tying a portion of the contractor’s compensation to how well you achieve the intended results of the effort.These don’t generally fit situations where you’re providing specifications and pay for code, though. Shared-risk/shared-reward would work if you start with the business request, or more accurately you start with what’s behind the request (the warehouse wants to increase its shipping capacity by 10%) and contract for achieving that, by whatever means necessary. – Bob Technology Industry